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The other thing they don't teach you in Econ 101 is that treating corporations as obligated to keep and preserve jobs prevents them from creating societal value, and treating workers as entitled to a job disincentivises the invention of new methods of creating societal value. It causes stagnation of the economy.

And what is Econ 201's solution to pervasive unemployment, or lack of spending power due to underemployment? Is that also classified as "societal value"?

I'm not sure if you have noticed, but unemployment is at a multi decade low.

We are not seeing pervasive unemployment, we are seeing the opposite. A situation where there are too many jobs, and not enough workers to fill them

So econ 201 would say that there isn't any societial problem right now.

Then why are wages so stagnant?

The increasing size of the unskilled labor pool? Could that be it?

ahem Income inequality suggests otherwise.

Income is far more equal than it was when people began worrying about automation causing unemployment (~100 years ago).

Because wages are a small part of the total compensation package - leaving out bonuses, health, dental, vision insurance policies, 401k (with matching), employee stock purchase plans, stock options or stock units awards, access to food and on-site services, company cars, etc.

They’re also not stagnant https://tradingeconomics.com/united-states/wage-growth

If my employer's group health insurance is considered part of my compensation, should I not be glad that health care costs are rising, since that drives up my total compensation?

From Australia's Reserve Bank:

https://www.rba.gov.au/publications/rdp/2018/pdf/rdp2018-10....

Then econ 201 clearly hasn't studied a graph of income inequality over time, and appears ready to ignore that the bulk of economic activity has shifted from manufacturing and other labor-intensive activities to the financial industry. But by all means, tell us more about how folks working "gigs", the pervasiveness of underemployment, and the frequency with which individuals have to work 3 or more jobs to survive isn't a societal problem.

Off the top of my head, I can think of the "disappearing middle class." The trend seems to be that anyone that would have previously found themselves with a place in life, that placed them below the upper middle class rich but above the working poor, are either becoming significantly richer or significantly poorer.

For perspective, a lot of households have seen a large increase in their wealth. Comparatively, the vast majority of food stamp recipients actively participate in the work force but still need government assistance. While it appears that there are many jobs available, it also appears that these jobs don't pay enough to allow the people who work them to live outside of a life of poverty.

The 'disappearing middle class' is not what you think it is. I try to actively research the things I talk about in in searching for information on the widely reported chiseling out of the middle class I came upon this [1] paper. And that paper does describe that. In 1979 the middle class controlled 46% of all income, and the upper/rich classes controlled 30%. Today (well at least today as of 2014) the rich and upper class control 63% with the middle class left with 26%. The middle class has also shrunk, going from 38.8% of society to 32%. And that's where most media reports on this generally stop, but it's incredibly misleading.

That paper also gets into exactly how the size of the various socioeconomic groups are changing. This is their change in size from 1979 to 2014, as a percent of the total population:

- Rich: 0.1% -> 1.8%

- Upper Middle Class: 12.9% -> 29.4%

- Middle Class: 38.8% -> 32%

- Lower Middle Class: 23.9% -> 17.1%

- Poor or Near-Poor: 24.3% -> 19.8%

Statistics like this are certainly subject to biased interpretation and 'massaging'. If one is curious about the source, wiki has a section on the political stance of the Urban Institute [2]. Though the paper itself is very transparent in their methodology and extremely readable. I found it all eye opening to the point that it literally changed my worldview. Everybody is moving up at an incredibly rapid pace. I mean keep in mind this is only over 35 years! We are doing something very right from an economic point of view.

[1] - https://www.urban.org/research/publication/growing-size-and-...

[2] - https://en.wikipedia.org/wiki/Urban_Institute#Political_stan...

> unemployment is at a multi decade low.

Labor participation on the other hand isn't [1]

[1] https://www.statista.com/statistics/191734/us-civilian-labor...

Are those jobs comparable to the ones those people would have had before? Or is it just a glut of cheap labor that is exploited because it's cheaper than automating things?

They teach you economic history and show that predictions of pervasive unemployment and lack of spending power caused by technical innovation have been made every decade and never been borne out as new ways of delivering societal value are constantly being invented.

In Econ 301 they teach you to never say never.

Whether this time is different than the previous rounds of automation or will have larger dislocative effects is the at the heart of the current discussion. We’ve literally been worried about robots replacing all workers since Fritz Lang made Metropolis in the 1920s. Maybe those concerns were early and maybe we’re repeating ourselves. It’s not really clear.

This may be a slight tangent, but I always took the interpretation of Metropolis as one of humans being _reduced_ to the level of machines (and in some ways subservient to them), less in replacement; the "moloch" scene comes to mind. The only robot in the movie seemed more an analog for questions of humanity, blurring the line of human and machine, and additionally touching on the whole classic "reviving a loved one" tropes.

(Not to distract from your point, other works such as Rossam's universal Robots definitely covered the subject matter you refer to, I'm being pedantic about Metropolis largely because the subtle difference I'm emphasizing feels to me as what makes it _so much more accurate and predictive_ to the actual relationship between man, machine, and the owners of production.)

> humans being _reduced_ to the level of machines (and in some ways subservient to them)

Oh, you mean like Uber and Deliveroo drivers?

In the last century, humans served machines. In this century, they will serve algorithms.

Lang's work is more relevant than ever. In many ways we are re-living the events of 100 years ago, only this time the US are in the driving seat, rather than Europe.

> Oh, you mean like Uber and Deliveroo drivers?

How is that any different than a waiter working for a restaurant or cafe? The old nature of things doesn't change if you replace a notepad with a web service.

> How is that any different than a waiter working for a restaurant or cafe?

This is the sort of insensitive and short-sighted remark that gives HN a bad name.

In one job, you work with a group of people, answering to people. In the other, you work alone, answering to a computer. The computer doesn't care if today you have a headache, your mother died, your child needs to see a doctor, or customer XYZ is an asshole: you will only be compensated precisely for how productive you are at any given time. The computer won't make you favours and won't help you any differently on any given day. You will not get to know the computer better over time, you won't become friends and go out together, or collaborate on a new business. The computer won't invite you to his wedding or introduce you to his children.

It's weird that we have to be reminded of this, but there is no humanity in the relationship with an algorithm.

I appreciate the clarification, and you're totally right. I grabbed at the cover image as it flashed through my mind without actually taking time to remember the film, which I haven't seen for a while.

I think we're definitely looking at, at the minimum, another day off the working week - similar to the shift from the early 20th century from 6 to 5 days, as combine harvesters triggered a movement of something like 90% of agricultural workers into cities.

Beyond that, it's hard to say. There is lots of work that needs to be done - picking up plastics anybody? - but the money is in the wrong places to pay for it, and at some point the flows in the system become so disrupted by wealth accumulation, that the only solutions is to press the reset button in any case.

...such interesting, interesting times.

>...such interesting, interesting times.

I think the "Chinese" (or Austen Chamberlain [1]) had it right when "May you live in interesting times" was meant as a curse.

[1] https://quoteinvestigator.com/2015/12/18/live/

US employment rate has steadily fallen over time. Currently the overall rate for working age people is around 60%. Which means ~40% of the adult working age population does not have a job.

Why the huge discrepancy with the official rate? Well some of it's stay at home parents and early retirees, but a large chunk of that is prison and disabled which have both quietly ballooned over time.

These numbers look worse when you include women and older men, but here is the long term trend: https://fred.stlouisfed.org/series/LREM25MAUSA156S

Actually the numbers including women don't look too bad. With the recent recovery in employment it actually looks like labour participation has been relatively flat since the mid-eighties.

https://fred.stlouisfed.org/graph/?g=lxWv

One does have to wonder how the statistics are affected by millions of working adult residents participating in the economy as illegal aliens and therefore not counted. The reduction in male labor participation also brings to mind what is clearly now one of the biggest splits in American conservatism: between people like Kevin D. Williamson[1] and Nicholas Eberstadt[2] who focus on a moral and cultural downward spiral, vs Steve Bannon [3] who credits the decline to free trade, and both legal (H1B) and illegal immigration.

[1] Read the last few paragraphs: https://www.nationalreview.com/magazine/2016/03/28/father-f-... [2] https://www.amazon.com/Men-Without-Work-Americas-Invisible/d... [3] https://www.youtube.com/watch?v=NAfm5L_DOLM

I don't agree. The combined rate for 25-55 year shows every year from 1988 to 2008 was above the rate from 2008-2016.

Now, if the current trend continues for 5-10 years then we might recover. But, based on historical trends 2018 is likely a peak right before a recession vs the new normal.

unemployment, or lack of spending power due to underemployment?

I think you misunderstood. You are describing negative societal value. Long-term unemployment can ruin not only your life but the lives of your family members.

Econ 201's solution is to punt on the issue and start doing calculus, because the economics orthodoxy was developed by heartless market neoliberals and computer scientists, and they can't really rationalize it in human terms. You literally have to go to grad school to un-learn all this shit.

Perhaps you should go ask a blacksmith. btw, unemployment is extremely low currently.

Just wait a couple hundred years and your skills will be back in demand. Artisanal blacksmiths make a killing today.

Sure, all twelve of them. It's a cottage industry, but I think you understood the point I was making.

Also, clothing is a commodity. Whatever benefit Uniqlo shareholders get from this will be short-lived as clothing prices drop around the world, benefiting all clothes buyers (everyone) at the expense of a textile workers, who -- at least for the time being -- can easily find a job elsewhere.

At some point, automation might be a cause for concern. But I really don't think this is that type of headline...

My argument is that this effect is small, diluted, and doesn't admit a strong positive feedback loop. Whereas the effect of sudden unemployment with no social safety net or training can trigger a strong negative feedback loop. You have the potential for strongly negative outcomes concentrated on a small number of people.

Now the question becomes, "is that a bad thing?" My answer is yes, because the forces that produce the negative feedback compound with each other. It becomes a "negative welfare contagion". It also is fundamentally unjust.

But your argument is solely build upon fancy words.

Here, let me pull an absurd scenarios out of nowhere too: Two of the now jobless workers are destined to become the next Beethoven and Musk, only able to follow their dreams being relieved of their crushing day job.

It is just absurd to diminish the positive effects of automation just because the negative effects combined with the (US-only) horrible state of state provided safety nets makes for better sob stories.

Exactly! Corporations should be free to do pretty much anything to increase value (except for a few obvious things like causing environmental damage), but also they will need to be taxed heavily, and those taxes should be spread out via basic income to everyone.

This needs to be done in a global scale, otherwise those companies will just tax optimize all the income away.

Unemployment isn't the problem, and forcing corporations to keep and preserve jobs is not the solution. Lack of income, however, is a problem. If machines generate a lot of value, but only the owners of those machines can profit from that value, that is problematic.

Thus, we'll need to find a way that combines providing value to most people, with a mechanism that actually results in methods that provide that value (e.g. machines) being developed and maintained.

your typical consumer will receive very little or no direct benefit from this change

Eh? I've shopped at Uniqlo in SF. Compared to buying clothes at hipster boutiques, it was shockingly affordable. I'd say whatever they are doing is unquestionably offering a direct benefit to the consumer.

Which is very silly, in the end: I am thrilled while thinking how many iPhones Apple will sell worldwide once we have 6.9 billion people unemployed.

What is silly is not taxing the economic efficiency reaped by capital owners and re-distributing it members of society so that they don't need to be employed.

You already receive that benefit. Will prices go down as a result of this automation? Will the freed resources be cleanly rerouted to other activities? Hell no, if there wasn't an article you'd never have noticed.

Will prices go down as a result of this automation?

They almost certainly will; that's just ECON101. I'm sure H&M and Zara aren't just sitting around admiring themselves in the mirror.

Clothing is a weird market but there is definitely an elastic low-end and Uniqlo is playing in that space. There's no reason to believe the rules of basic economics are not functioning.

Prices are set to maximize revenue. Most companies aren't going to lower prices just because they can afford to; cost savings should (and usually do) go to shareholders.

You're right! Costs savings, in isolation, will invariably go to highly privileged shareholders.

With that said, what do you think happens when a second company in the same sector starts to realize the same cost savings, and realizes they can move more units by using the cost savings to lower prices and ultimately return even more to shareholders?

Again, you're completely right. Companies don't lower prices out of the goodness of their cold, black, capitalist hearts. Yet, might there be other factors at work here?

>Will prices go down as a result of this automation?

Can you name a single instance where prices did _not_ go down due to automation? You're saying process won't go down tomorrow, but of course that's not how any of this works.

Prices don't go down unless there is competition. If a company figures our a way to make massive cost savings while their competition does not, they pocket that margin and use it to either invest in more productive capacity or give back to shareholders. They don't feel some ethical need to lower prices just because they can

Automation is correlated with cost savings for consumers because usually the competition can figure out the same thing after seeing another player do it. It's a mistake to think they are causally related

>Prices don't go down unless there is competition

Prices also go down if it will lead to more profit. If you can sell 2.1 times as many widgets selling at half the profit then of course you will.

Well, sure, "if a company figures our a way to make massive cost savings while their competition does not" - but Uniqlo isn't that unique; nothing that they have done here is something that's fundamentally impossible for their competition to implement as well, it's just a question of appropriate investment. Yes, there's no reason for them to lower the prices right now, but that will result in mid-term (3-5 years) price decreases in the industry.

>If a company figures our a way to make massive cost savings while their competition does not, they pocket that margin and use it to either invest in more productive capacity or give back to shareholders.

Well sure, but in what world is that going to happen in here? They didn't invent time travel; they automated a factory. This can be replicated. They may also lower prices simply to undercut competitors if they think the increase in volume will work out to more profits overall.

> Will prices go down ... you'd never have noticed.

Note that these two are entirely compatible. Prices routinely go down and customers receive benefit but they do not notice.

For example, I wrote about research on effect of barcode scanner here: https://news.ycombinator.com/item?id=11414435

Interesting, thank you.

Pocketing extra margin dollars is not necessarily profit maximizing. As other have pointed out, depending on where their customers (and currently priced out customers) are on the demand curve, reducing prices could increase profits. I expect Uniqlo to seek to maximize profits.

But that's only the case for consumers with income. People who can only do jobs that machines can do better will have no income, so once a lot of people are in that situation, we will need to find a way to provide those people with at least the income required to be able to buy even the cheapest clothes.

Wouldn't this mainly just be a problem if there wasn't much competition in the market? If cost savings aren't being passed on to the consumers I would blame lack of competition before I consided blaming automation

It's not just about passing the savings onto consumers. Even if you deduct 10-15% for tax evasion, most of that money will end up recirculating into the economy.

The point I was clumsily trying to make is that it doesn't really matter. There are forces in the US economy that lead to strong feedback loops of negative welfare for individuals and the families of individuals who come on economic hard times. So while your shirt gets $2 cheaper, someone out there is getting addicted to Klonopin while their wife buys bread on food stamps, and their kid grows up to be a gangbanger, who kills another kid at the age of 15, because he had anger issues and they couldn't afford therapy.

I'm being deliberately hyperbolic, but I hope it helps illustrate the point. In the USA it's shockingly easy to end up in a vicious cycle of poverty that hurts everyone, not just the person with no money. Net welfare gain could well be negative from the situation described above.

I think what you are saying is automation is harmful when there is no safety net. I tend to agree. I think the right solution is to set up safety net. In particular, I don't think stopping automation is the right solution.

The question is, who is going to pay for that safety net, and is it really still a "safety net" when a majority of the citizens have to rely on it?

It could be argued that since automation drives the need for these arrangements, it ought to be taxed accordingly to pay for the measures that mitigate them.

As a child I remember reading one of stories of Stanislaw Lem on where robots did all the work mass producing goods trying to find markets for them.

It ends with replacing humans with crystals. (so a combination of paperclip problem and automatization)

https://en.wikipedia.org/wiki/The_Star_Diaries (1958!)

Unfortunately, Uniqlo's job is so inhuman from top to bottom.　Possible exception for a few tops but it's just because they have large capital to buy share.

You can't imagine having a family when working on Uniqlo.

It should better be automated for the rest of the world.

Marx knew though and is still relevant as teaching material, regardless of your ideological leanings. I've only read the comic book(!) though, "Marx for beginners", so im just a happy amateur. "happy"